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S.M.A.R.T. Planning Model

Student’s Name

University of the People

BUS 2204 - Personal Finance

Yashita Thaliya

21//6/2023
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S.M.A.R.T. Planning Model

Use the S.M.A.R.T. planning model and information in this section to evaluate Alice’s

goals. Write your answers in your financial planning journal or My Notes and discuss your

evaluations with classmates.

a. Pay off student loan

b. Buy a house and save for children’s education

c. Accumulate assets

d. Retire

e. Travel around the world in a sailboat

Introduction

Defining goals entails understanding where you want to go. There are shorter-term (1–2

years), intermediate (2–10 years), and longer-term goals that are quite realistic and goals that are

more wishful (Siegal & Yacht, 2009). Setting goals is a skill that usually improves with

experience. According to a popular model, to be truly useful goals must be Specific, Measurable,

Attainable, Realistic, and Timely (S.M.A.R.T.).

Evaluation of Alice’s Goals

Goals change over time, and certainly over a lifetime. Whatever your goals, however, life

is complicated and risky, and having a plan and a method to reach your goals increases the odds

of doing so (Siegal & Yacht, 2009). For example, after graduating from college, Alice has an

immediate focus on earning income to provide for living expenses and debt (student loan)

obligations. Within the next decade, she foresees having a family; if so, she will want to

purchase a house and perhaps start saving for her children’s educations. Her income will have to
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provide for her increased expenses and also generate a surplus that can be saved to accumulate

these assets.

In the long term, she will want to be able to retire and derive all her income from her

accumulated assets, and perhaps travel around the world in a sailboat. She will have to have

accumulated enough assets to provide for her retirement income and for the travel. Figure 1.10

shows the relationship between timing, goals, and sources of income.

Alice’s income will be used to meet her goals, so it’s important for her to understand where her

income will be coming from and how it will help in achieving her goals. She needs to assess her

current situation.

Conclusion

Goals are shaped by current and expected circumstances, family structure, career, health,

and larger economic forces. Choices will allow faster or slower progress toward goals and may

digress or regress from goals; goals can be eliminated. An individual should evaluate your

feasible choices by calculating the benefits, explicit costs, implicit costs, and the strategic costs

of each one.
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References

Siegal, R. & Yacht, C. (2009). Personal finance. Saylor Foundation.